SIGNALS™ provides detailed information on the regulations and activities of the US Federal Maritime Commission (FMC), and related developments in the ocean freight industry. For past issues, please consult our index.

FMC Increases Civil Monetary Penalties

On January 15, 2018, the Federal Maritime Commission (FMC) implemented increases to maximum civil monetary penalties as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The maximum penalty for violations of the Shipping Act or Commission regulation or order is now USD 11,712; each day of a continuing violation or each bill of lading issued is a separate violation. Violations found to be “knowing and willful” are subject to a maximum penalty of USD 58,562 each. Ocean carriers and NVOCCs who are found to have operated in the U.S. trades after their tariffs were cancelled or suspended by the FMC may be penalized USD 114,782. The full table of penalty amounts is documented in FMC Docket 18-01, which was published in the Federal Register and is accessible at http://www.fmc.gov/18/

Commission Holds Two Days of Hearings on Petition P4-16

The Federal Maritime Commission held two days of hearings on January 16 and 17, 2018 to examine issues related to detention, demurrage, and per diem practices of marine terminal operators and ocean carriers raised in Petition P4-16. Acting FMC Chairman Michael A. Khouri said the Commission will meet in closed session to discuss next steps soon, but he did not set a timeline for a decision by the Commission or for the rule making requested in the 209-page petition submitted in December 2016 by the Coalition for Fair Port Practices.

The hearings were called by the Commission to gather information beyond what was presented in written comments filed in the docket, and to provide Commissioners with the benefit of direct questioning and dialog with the witnesses. Twenty-six people testified on seven different panels during the hearings. Acting Chairman Khouri noted, "this is a very complex issue that presents difficult choices. The question to be resolved is if the Commission, with a judicious hand, can help make things better, though we recognize, we will never be able to solve all the issues associated with the timely handoff of the container from carriers to shippers."

Panels appearing before the Commission on Tuesday, January 16, represented the Petitioners, cargo owners, and ocean transportation intermediaries, all of whom testified in support of the petition and explained in detail why the proposed rulemaking is necessary to ensure fair and reasonable detention and demurrage practices. Richard Roche of Mohawk Global Logistics urged the Commission to issue a rulemaking that would require ocean carriers and terminal operators to automatically extend free time for certain causes. Don Pisano, President of American Coffee Corporation, testified his company has suffered through service disruptions caused by labor disputes between carriers and stevedores, and has experienced many incidents of severe congestion at terminals because of larger vessels, the bunching of port calls, and poor coordination between carriers and terminal operators, all of which prevented cargo pickup and the return of empty containers within the allowed free time.

Panels for the second day represented the drayage industry, ocean carriers, and ports and terminals. The drayage industry witness supported the petition, while the witnesses on the carriers, ports, and terminals panels all testified in opposition to the petition. John W. Butler, President & CEO, of the World Shipping Council, testified "the relief that the Petition seeks is unsupported by the law and the facts. In addition, granting the requested relief would be bad policy." All comments submitted to the FMC on this petition and the written testimony of several of the people who testified at these hearings is provided at https://www.fmc.gov/p4-16/

Several carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lanes (U.S. Imports) implemented General Rate Increases (GRIs) effective January 15, 2018, and most of these carriers have filed additional GRIs effective February 15 and/or March 1.

Carriers implementing GRIs effective January 15, 2018 included American President Lines (APL), CMA CGM, COSCO, Evergreen, Hapag-Lloyd, Hyundai Merchant, and K Line. See below table for a summary of the GRI amounts per forty-foot equivalent unit (FEU). GRI amounts for other container sizes are as per formula.

TSA EASTBOUND (Asia to USA)

GENERAL RATE INCREASE (GRI)Effective January 15, 2018, except as noted

Note 2: COSCO postponed GRIs for USWC from effective January 15 to January 22; GRIs of USD 800 per FEU for USEC/Gulf became effective January 15.

Note 3: Effective January 15, Evergreen reduced the GRI amounts from USD 1000 to USD 400 per FEU for cargo to USWC/G4, cargo delivered to other inland via USWC (except G4 States), and cargo delivered to Houston, TX / Jacksonville, FL / Mobile, AL / Miami, FL / New Orleans, LA Ports; to USD 500 per FEU for all other cargo. Evergreen had postponed GRIs for origins India, Sri Lanka, Pakistan, Bangladesh to USA to effective January 22, but subsequently withdrew the GRIs for these origins.

Note 4: Hyundai applied GRIs of USD 500 per FEU effective January 15 for cargo destined to USWC via PN and USEC, and postponed remaining USD 500 to effective January 22. Hyundai postponed to GRIs to effective January 22, for shipments destined to UWC via PS and inland via WC.

Note 5: K Line postponed GRIs of USD 1000 per FEU for via USWC from effective January 15 to January 22; GRIs of USD 550 per FEU for via USEC applied effective January 15, and the remaining USD 450 per FEU was applied January 22.

Transpacific eastbound freight rates will continue to increase in February and March 2018. The following carriers updated their respective tariffs to include new General Rate Increases (GRIs) effective February 15, 2018 and/or March 1, 2018, including APL, CMA CGM, COSCO, Evergreen, Hapag-Lloyd, Hyundai Merchant Marine, and Yang Ming. K Line and NYK Line are no longer carrier members, but filed similar GRIs in their respective FMC tariffs. See tables below for GRI amounts per 40ft container; GRI amounts for all other container sizes are as per formula. The February 15th and March 1st GRIs will be the third and fourth GRIs of 2018 for the East Asia/USA trade lane, respectively.

Hapag-Lloyd AG To Update Bunker Charges Monthly, Instead of Quarterly

Hapag-Lloyd AG has announced that with effect from March 1, 2018 it will change its Bunker Charge (BUC) and Low Sulphur Fuel Charge (LSF) update cycle from quarterly to monthly for all applicable trades, including the East Asia/USA trade lanes (U.S. Imports). The change of the update cycle is said to be necessary due to the strong bunker price development. Furthermore, Hapag-Lloyd subsequently announced that effective from March 1, 2018, Hapag-Lloyd will increase the Bunker Fuel Factor (BFF) surcharge for all dry, reefer, flat rack, and open-top containers from East Asia and Indian Subcontinent to all USA and Canada destinations. Effective March 1, 2018, the BFF will increase from USD 365 to 429 per FEU for Transpacific Eastbound cargo to US West Coast, and from USD 656 to 756 per FEU for cargo to US East Coast. BFF amounts for other container sizes are as per formula.

At this time, other current and former TSA Carrier members serving the Trans Pacific trade lanes have not yet followed Hapag-Lloyd in changing to monthly bunker fuel surcharge updates, instead of quarterly updates as they have done for many years; however that may change soon if bunker fuel prices fluctuate.

The TSA Carrier group web site at www.tsacarriers.org provides additional information; however, each carrier maintains its own tariffs and controls its own pricing. General rate increases are filed only in carrier tariffs.

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The information contained herein is obtained from reliable sources. It is subject to change at any time, however, depending on changes in laws and regulations. While we continually attempt to monitor this information, we do not guarantee its accuracy and are not responsible for any damages suffered by any party in reliance on it.